Taylor Corporation acquired property on January 1, 2014 at a cost of $5,000,000 that is operated as a landfill. Taylor has estimated the fair value of the asset retirement obligation to meet environmental remediation legislation to be $4,000,000 which has been determined using a credit-adjusted risk-free rate of 5%. The landfill has an estimated life of twenty five years. Which one of the following statements describes the appropriate accounting treatment for the landfill property on Taylor Corporation's financial statements for the fiscal year ended December 31, 2014?
Select one:
1. Report the landfill property at a net carrying amount of $8,640,000, recognize a liability for the asset retirement obligation in the amount of $4,000,000, and recognize charges to the income statement totalling $160,000 pertaining to the asset retirement obligation.
2. Report the landfill property at a net carrying amount of $8,640,000, recognize a liability for the asset retirement obligation in the amount of $4,200,000, and recognize charges to the income statement totalling $360,000 pertaining to the asset retirement obligation.
3. Report the landfill property at a net carrying amount of $8,640,000, recognize a liability for the asset retirement obligation in the amount of $4,200,000, and recognize charges to the income statement totalling $560,000 pertaining to the asset retirement obligation 
4. Report the landfill property at a net carrying amount of $4,800,000, recognize a liability for the asset retirement obligation in the amount of $160,000, and recognize charges to the income statement totalling $160,000 pertaining to the asset retirement obligation.
The correct answer is 2. Why is 2 and not 3 is the correct answer? Isn't accretion expense of $200,000 also one of the charges to the income statement pertaining to the asset retirement obligation?